BHR.L Regulatory News (BHR)

29 May 2007 07:02

Carnegie Minerals plc29 May 2007 29 May 2007 Carnegie Minerals Plc ("Carnegie" or the "Company") Preliminary results for the period ended 31 December 2006 Carnegie Minerals Plc, the mineral sands resource company with productioninterests in The Gambia and advanced exploration in adjoining Senegal, ispleased to announce unaudited results for the period ended 31 December 2006. Highlights • Successful IPO in August raised net £1.5 million to fund Carnegie's share of exploration in Senegal and support the mining operation in The Gambia, funded by offtake partner Astron Ltd ("Astron") • Mining at Sanyang in The Gambia commenced ahead of schedule • First shipment of concentrates made to China Highlights since the period end The Gambia • Mining project construction well advanced with three production units already commissioned Senegal • Completed in fill drilling of first dune (at Niafarang) resulting in a high grade resource • Low level remote sensing undertaken over entire license area, generating numerous targets for exploration drilling • Drilling of targets generated by remote sensing, now underway The Chairman Alan Burns said: "2006 was a key year in the development of Carnegie; Following our successfulfloat on AIM in August, we have brought the Gambian projects into firstproduction, discovered a significant high grade resource at Niafarang over theborder in our Senegal licence area, flown a high resolution aeromag survey overthe whole Senegal licence area and significantly strengthened our operationalmanagement team with key appointments to the mining team. 2007 promises to be a year of significant progress as we step up our productionin The Gambia and continue to assess our adjoining areas in Senegal." For further information, call: Alan Hopkins, Managing Director, Carnegie Minerals Plc 020 7831 3113Romil Patel / Olly Cairns, Blue Oar Securities Plc 020 7448 4400Billy Clegg /Edward Westropp, Financial Dynamics 020 7831 3113 Notes to editors: Carnegie listed on AIM in August 2006. It has already brought into fullproduction three dredges and is on track to meet its 2007 production targets inThe Gambia. It has completed a high resolution airborne geophysical survey overthe Southern Senegal licence area generating a number of targets for testdrilling. It drilled the first evaluation target in Senegal (Niafarang) &recently announced a high grade resource for this area. All exploration in Senegal is 50% co funded by Astron (the largest independentbuyer of zircon in China), with the emerging production in The Gambia fullyfunded by Astron (a 50% partner in each project). Chairman's statement I am pleased to be able to report our inaugural period has been one of greatprogress. Since listing on AIM in August 2006, we have rapidly advancedconstruction at our mineral sands project in The Gambia with several productionunits already commissioned and on schedule. As the project comprises severalmining targets at different locations, these are being developed sequentially sothat production and exports commence while the remaining units are commissionedthroughout 2007. In parallel, our exploration team in adjoining Senegal has moved forward quicklywith its evaluation of the targets adjoining The Gambian deposits with positiveresults. The Gambian production will provide a platform for the development ofany additional resources discovered in adjoining Senegal. Additionally, the Company and its subsidiaries (the "Group") activities havegenerated new opportunities, with preliminary investigation work on thesepotentially leading to further opportunities and growth. I would also like to thank management and the operational teams for theirdiligent and exhaustive efforts to bring this project to realisation. Results As our ventures were predominantly in the construction phase during the period,turnover was restricted to the preliminary sale by our Gambian joint ventureentity of some concentrate processed by the small trial programme separatorstotalling £77,000. Expenditure by our 50% partner, Astron, is providing thefunding on developing the production capability, totalled £1.1 million to theperiod end. The Group invested in establishing both a financial and operating base fromwhich it can then expand. Losses attributable to ordinary shareholders for thisinitial period totalled £308,525. The loss per share was 1.187p. The Board isunable to recommend a dividend at this stage of the Company's development. On Admission to AIM the Company raised £1.5 million net of expenses. As at 31December 2006, the Group's cash reserves were £1.2 million. Board and management In line with the development of the Group's emerging mining project in TheGambia, we recruited Mining Project Manager, Rob Bradley who has assumedresponsibility for overseeing the development of the Gambian mining project. Wealso recruited Andrew Storrie as our In Country Manager to oversee a growingteam that now exceeds 120. This is a multinational effort that includes asignificant Chinese contingent operating and supporting the dredges provided byour Chinese based project partner, Astron, who also provides the market for ourproduct. Outlook The coming year promises to be a remarkable year with the mining and processingfacilities in The Gambia to be fully commissioned and heading to full productioncapacity. This will provide project revenues and enable the commencement ofrepayment of the interest free development funding from Astron. The results ofthe exploration work in Senegal will provide an understanding of the probablefinal scale / mine life of this cross border mineral sands project which theBoard believes has significant potential. The pursuit of new opportunities thathave arisen also promise to add to the growth prospects of our young Group. I would like to thank all our shareholders for their support and our hardworkingexecutive team for their efforts during this demanding start up phase and welook forward to the coming year with great anticipation. Review of operations "Emerging production provides Carnegie with a platform for expansion in 2007" Two events stand out as significant milestones in the development of Carnegieduring the period under review. The first was the successful listing of the Company in August 2006 on the AIMmarket that raised £1.5 million net of expenses. This, in conjunction with thefunding arrangements with our partner, Astron, provides the structural andfinancial platform for the Group to support the emerging production in TheGambia and meet its share of exploration expenditure in adjoining Senegal. The second milestone was the progress made in establishing production capabilityin The Gambia. At the time of writing, all four mining dredges have beenconstructed with three of these already commissioned and fully operational. Thiswas made possible by the recruitment of key new members to the executive team. Since the period end, we have made further significant progress. The first was the completion of the infill drilling at the first and nearesttarget in adjoining Southern Senegal. This coastal dune (Niafarang) is just 4kilometres from the Group's Kartung deposit in The Gambia. An auger drillingprogramme comprising about 1,600 line metres resulted in a high grade indicatedresource for this area. The second was the commencement of exploration of the large coastal dune systemsin southern Senegal. The first phase involved flying a high resolutiongeophysical (magnetic and radiometric) survey over the entire license area. Thisgenerated a number of exploration targets that warrant drill testing. At thetime of this report, a very experienced Australian drilling contractor has beencontracted to undertake air-core drilling in this area. Emerging production - The Gambia The mining approach applies wet mining, using four dredges, to the low lyingareas and dry mining, using a bulldozer and front end loaders, to the higherdune deposits. The dredging fleet comprises three suction dredges and one ladderdredge all with their own spiral concentration units. All four dredges have beenconstructed with three already commissioned and working to capacity. As eachunit is commissioned, production levels progressively increase. The dry mining fleet has been acquired from China and arrived in The Gambia inApril 2007. This equipment will feed the spiral plant used for the earliersuccessful dry mining trials at Brufut (modified to make it more mobile). All the units produce gravity concentrates i.e. a combined heavy mineralconcentrate that contains both the non magnetic (zircon and rutile) and themagnetic (ilmenite) valuable minerals. Currently this combined concentrate isbeing sold and shipped to China based offtake partner, Yingkou Astron ChemicalCo. Ltd, a subsidiary of Astron. It is planned for a magnetic separation plantto be constructed in The Gambia which will then enable magnetically separatedproducts to be shipped. We expect to produce approximately 80,000 tonnes of heavy mineral concentrate inthe part production year that is 2007 which equates to around 15,000 tonnes ofnon magnetic concentrate. Our target thereafter is 20,000 tonnes per annum ofnon magnetic concentrate. While production capability has been the development priority, the constructionof onsite infrastructure, such as laboratories, workshops, stores and offices,is also well underway. Review of operations (continued) All mine development work is funded by way of an interest free loan from theofftake party and 50% shareholder Astron. Exploration -Senegal The Company believes the mineral sands deposits in The Gambia extend across theborder into adjoining Southern Senegal. We have made quick progress followingthis up, with the nearest target at Niafarang, just over of the Gambian borderand 4 kilometres south of the Group's Kartung deposit, already auger drilled ona grid spacing of 200 m by 20 m. This resulted in a high grade resource beingcalculated for this area. In addition to the evaluation of this first target, we have flown a highresolution (low level) aeromagnetic and radiometric survey over the entirelicence in the coastal area of Southern Senegal. This generated a number oftargets for drill testing and we have contracted Australian Wallis Drilling todrill a minimum of 8,000 line metres to test these targets. Once all the above results are in, we will have a better understanding of theprobable eventual scale of operations for this cross border project. Other exploration While production is emerging and exploration is actively underway on theSeneGambia mineral sands project, the Group's activities and presence havegenerated further growth opportunities. The merits of these are being carefullyinvestigated by the Board as potential areas of participation going forward. Management team With the commencement of construction and production in The Gambia, we havehired key experienced mining professionals Rob Bradley (Project Manager), AndrewStorrie (resident In Country Manager) and Neil Martin (resident Mine PlanningEngineer). Rob has extensive mining project start up experience from his time with Sons ofGwalia Ltd, Pac Min Mining Corp, Teck Corp and Mt Edon Gold. Andrew, a miningengineer from Camborne School of Mines has extensive mining experience inAfrica, Venezuela and Canada and includes time with Falconbridge, De Beers andKanzai Mining. Neil is an MSc graduate from Imperial College and has over 30years of mining experience in Zambia, Ghana, Sweden and Canada. Additionally, the recent recruitment of Ebrima Cessay (resident Accounting &Administration Manager) to take over the accounting function will ensure thenecessary in country controls, and sufficient management information is providedto the Board as activity increases. The Board believes this team will provide the necessary operational and miningcapability as the Group moves into its first production phase and we welcomethem onboard. Prospects 2007 promises to be a very active year for Carnegie. We expect the miningoperations in The Gambia to be fully established with operations settled into asteady state. Over the adjoining border in Southern Senegal we expect to have amining resource estimate for the first target at Niafarang and to haveinvestigated the extent of mineralization in other areas further to the south.This should provide us with a good understanding of the probable final scale ofoperations for this project. Additionally, the promise of involvement in further projects provides theCompany with a series of achievable challenges for the coming year. Note 2006 £ Revenue - management fees 25,844Administrative expenses (471,640)Other operating income 183,970Operating loss (261,826)Share of losses of joint venture (73,369)Finance income - bank interest 26,670Loss before tax (308,525)Tax expense -Loss for the period attributable to equity holdersof the parent entity (308,525) Loss per share attributable to equity holders ofthe parent entity Basic and diluted 2 (1.187)p All results are derived from continuing operations 2006 £Loss for the year (308,525)Foreign exchange gain on retranslation of overseasoperations 6,768Total recognised income and expense for the year (301,757) Attributable to:Equity holders of the parent (301,757) Notes 2006 £AssetsNon-current assetsIntangible assets 448,288Property, plant and equipment 84,366Interests in joint ventures 656,150 1,188,804 Current assetsTrade and other receivables 78,637Cash and cash equivalents 1,205,322 1,283,959Total assets 2,472,763LiabilitiesCurrent liabilitiesTrade and other payables 108,200Total liabilities 108,200Net assets 2,364,563 Equity attributable to shareholdersShare capital 3 550,000Share premium 4 969,851Merger reserve 5 839,346Foreign exchange reserve 5 6,768Warrant reserve 5 250,000Retained earnings 5 (251,402)Total equity attributable to shareholders 2,364,563 2006 £ Net cash flow from operating activitiesLoss for the period (308,525)Depreciation and amortisation 7,648Share-based payment expense 57,123Share of losses of joint venture 73,369Interest received (26,670)Foreign exchange gains (21,966)Movement in working capital: - trade and other receivables (78,399) - trade and other payables (163,560)Cash flow from operations (460,980) Cash flow from investing activitiesPurchase of property, plant and equipment (80,536)Net funds acquired with subsidiary undertakings 225,317Interest received 26,670Net cash flow from investing activities 171,451 Cash flow from financing activitiesIssue of shares 2,025,000 Listing expenses and share issue costs (530,149)Net cash flow used in financing activities 1,494,851 Net increase in cash and cash equivalents 1,205,322Cash and cash equivalents at 3 February 2006 -Cash and cash equivalents at 31 December 2006 1,205,322 Cash and cash equivalents comprises of:Cash available on demand 58,496Short-term deposits 1,146,826 1,205,322 1 Basis of preparation The financial information in this announcement has been prepared in accordancewith International Financial Reporting Standards (IFRS and IFRICinterpretations) issued by the International Accounting Standards Board (IASB)and with those parts of the Companies Act 1985 applicable to companies preparingtheir accounts under IFRS. The financial information set out in the announcement does not constitute thecompany's statutory accounts for the period ended 31 December 2006. Thestatutory accounts for the period ended 31 December 2006 will be finalised onthe basis of the financial information presented by the directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the company's annual general meeting. 2 Loss per share The calculation of basic loss per ordinary share is based on a loss of £308,525and on 25,981,873 ordinary shares, being the weighted average number of ordinaryshares in issue during the period. There is no difference between diluted lossper share and the basic loss per share presented as the Company reported a lossfor the period. The company has issued share options and warrants over ordinary shares both ofwhich could potentially dilute basic earnings per share in the future. 3 Share capital 2006 2006 Number of shares £ Authorised: - Ordinary shares of 1p each 100,000,000 1,000,000Issued and fully paid: - Ordinary shares of 1p each 55,000,000 550,000 4 Share premium account Premium arising on issue of Ordinary Shares £ On placing of shares 1,500,000 Expenses of placing (530,149) Balance as at 31 December 2006 969,851 5 Reserves Merger Foreign exchange Warrant Retained reserve reserve reserve earnings £ £ £ £ Arising on acquisitions 839,346 - - -On issue of warrants - - 250,000 -Gain/(loss) for the period - 6,768 - (308,525)Fair value of share based - - - 57,123paymentsAt 31 December 2006 839,346 6,768 250,000 (251,402) This information is provided by RNS The company news service from the London Stock Exchange